Two investment trusts I'd buy and hold for 25 years
RIT Capital Partners(LSE: RCP) and Personal Assets Trust(LSE: PNL) may not have the most eye-catching names but their long track records of delivering lower risk, market-beating returns make them standout investments, in my view. I'd be happy to buy both and hold them for 25 years or more.
These two investment trusts are conservatively managed, with capital preservation as their first priority. While they may not rise as extravagantly as some of their peers in raging bull markets, they don't fall as heavily when markets crash. By this means, they've built up their long records of market outperformance.
RIT Capital Partners is chaired by Lord Rothschild and enables private investors to invest alongside the famous family of financiers to protect and enhance their wealth over the long term.
According to the trust's latest results, "£1,000 invested in RIT at inception in 1988 would be worth in excess of £30,000 today compared to the same amount invested in the MSCI All Country World Index which would be worth approximately £6,700." And this has been achieved by the trust having "participated in 75% of market upside but only 39% of market declines."
Part of RIT's success comes from its ability to invest without restraint. It's able to allocate capital internationally, across a range of asset classes, both quoted and unquoted. It also utilises the talents of some external fund managers, providing exposure to investment areas (for example, hedge funds) that are largely inaccessible to small private investors.
Currently, with "share prices have in many cases risen to unprecedented levels at a time when economic growth is by no means assured," the trust is cautious. It stated in its latest results: "We do not believe this is an appropriate time to add to risk." Regular quoted equity (long) represents 36% of the portfolio, with the remainder in diverse assets, notably absolute return & credit (25%), private investments (22%) and hedge funds (21%).
PAT on the back
Personal Assets Trust's investment policy is "to protect and increase (in that order) the value of shareholders' funds per share over the long term." As well as the similar philosophy to RIT, PAT shares its current cautious view of markets, stating: "After a prolonged bull market in both bonds and equities we therefore remain focused on capital preservation, not the maximisation of upside."
PAT's equity exposure is 43%, with its holdings being predominantly defensive global giants. Its current top five positions are Philip Morris, British American Tobacco, Microsoft, Nestlé and Coca-Cola. In contrast to RIT, hedge funds and private investments don't feature, with the remainder of PAT's portfolio being in US and UK inflation-linked and short-dated government securities (44%), gold (9%) and cash (5%).
So, while RIT and PAT share a common investing philosophy and current general outlook on markets, their portfolios are far from identical, making both trusts well worth holding, in my view.
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G A Chester has no position in any of the shares mentioned. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.